Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — FY2018 Earnings Presentation
40 slides from Fisher & Paykel Healthcare's earnings presentation, 2018
Slide 1: Full Year Results Presentation FY2018 | Care by Design
Full Year Results Presentation FY2018 | Care by Design Fisher & Paykel HEALTHCARE
Slide 2: Important Notice
Important Notice Disclaimer The information in this presentation is for general purposes only and should be read in conjunction with Fisher & Paykel Healthcare Corporation Limited’s (FPH) 2018 Annual Report and accompanying market releases. Nothing in this presentation should be construed as an invi
Slide 3: FY2018 Business Highlights
FY2018 Business Highlights + WELCOMED SIGNIFICANT NEW CLINICAL RESEARCH USING OUR OPTIFLOW JUNIOR AND MYAIRVO PRODUCTS + ENCOURAGED BY THE PUBLICATION OF 259 NEW CLINICAL STUDIES IN NASAL HIGH FLOW THERAPY IN 2017 + INTRODUCED OUR NEW PRODUCTS, SLEEPSTYLE, NIVAIRO AND OPTIFLOW JUNIOR 2 INTO GLOBAL M
Slide 4: Hospital Product Group
Hospital Product Group ns = Noninvasive ventilation (NIV), Optiflow « — AIRVO2 Optiflow * New applications consumables* made up 59% of H2 FY2018 Hospital consumables revenue, up from 55% in H1 FY2018 * Strong customer demand for our Optiflow and AIRVO systems * Further positive clinical trial result
Slide 5: Homecare Product Group
Homecare Product Group Oe QO CPAP therapy / Obstructive Sleep Apnea (OSA) 41% OF OPERATING REVENUE H2 FY2018 HOMECARE OPERATING REVENUE A% NZ$ | Simplus Eson2 Brevida SleepStyle {0} 3% . Home respiratory support MASKS REVENUE NZ$ {0} 4% CONSTANT CURRENCY we CONSTANT CURRENCY fe) 2% myAIRVO2 810Syste
Slide 6: Second Half Financial Highlights
Second Half Financial Highlights H2 FY2018 (6 months to 31 March 2018) NZ$M OPCP* Occ* Record operating revenue 522.5 +11% +9% Record Hospital operating revenue 310.5 +17% +15% Record Homecare operating revenue 207.0 +4% +3% Hospital new applications consumables revenue +27% +25% OSA masks revenue +
Slide 7: Full Year Financial Highlights
Full Year Financial Highlights FY2018 (12 months to 31 March 2018) NZ$M OPCP* Occ* Record operating revenue 980.8 +10% +9% Record Hospital operating revenue 572.1 +14% +13% Record Homecare operating revenue 398.1 +4% +4% Hospital new applications consumables revenue +23% +22% OSA masks revenue +6% +
Slide 8: Dividend and Gearing
Dividend and Gearing « Increased final dividend by 11%: - 12.50 cps + 4.861 cps imputation credit for NZ residents (gross dividend of NZ GEARING® 17.361 cps) 50% - Fully imputed 25% - 2.206 cps non-resident supplementary °° dividend 15% - Dividend reinvestment plan available 10% for New Zealand and
Slide 9: Outlook FY2019
Outlook FY2019 Expect at current exchange rates (of NZD:USD 0.695, NZD:EUR 0.59): * Operating revenue - NZ$1.05 billion * Net profit after tax - approximately NZ$210 million Capital expenditure for FY19 expected to be approximately NZ$160 to $170 million * New facilities in New Zealand and Mexico *
Slide 10: rc ey
rc ey Fisher & Paykel 10 HEALTHCARE
Slide 11: Healthcare at a Glance
Fisher & Paykel Healthcare at a Glance Global leader in respiratory humidification devices N Medical device manufacturer with leading positions in respiratory care and obstructive sleep apnea 45+ years’ experience in changing clinical practice to solutions that provide better clinical outcomes and i
Slide 12: ~US$6+ Billion and Growing Market Opportunity
~US$6+ Billion and Growing Market Opportunity HOSPITAL HOMECARE Invasive Hospital Non-invasive Surgical Home Ventilation Respiratory Support Ventilation Humidification Respiratory Support a 2 Fisher& Paykel HEALTHCARE “NEW APPLICATIONS” Applications outside of invasive ventilation
Slide 13: Our Aspiration
Our Aspiration @ © A) @ OUR ASPIRATION: Sustainably HUMIDIEICATION | THERAPY/OSA RESPIRATORY RESPIRATORY TECHNOLOGIES SUPPORT SUPPORT DOUBLING our constant currency revenue every 5-6 years. SHORT-TERM MEDIUM-TERM LONGER-TERM . i -) Fisher & Paykel “CONSTANT CURRENCY HEALTHCARE
Slide 14: Markets & Products
Markets & Products * Hospital REVENUE BY PRODUCT GROUP -yegs as 12 MONTHS TO 31 MARCH 2018 - Heated humidification - Respiratory care - Neonatal care - Surgery 1% * Homecare - Masks - Flow generators - Data management tools - Respiratory care in the home Recurring items, consumables and : ‘ @ Hospit
Slide 15: Impact of Changing Demographics
Impact of Changing Demographics * Population age and weight both US POPULATION OVER AGE 65 . + (MILLIONS) increasing 100 - US population 65 years+ to grow 30 ~80% over next 20 years! - US males 60 - 74 years, average weight increased 70 0.4 kg/year since 19602 «0 * 60% of US healthcare cost is after
Slide 16: Hospital Cost Breakdown
Hospital Cost Breakdown 6% Medical devices Other - includes labour, utilities, drugs, supplies, 94% food, depreciation. ; — , 6 . 5 Fisher & Paykel 16 Source: Estimates of Medical Device Spending in the United States, Donahoe, G and King, G, June 2014 HEALTHCARE
Slide 17: Lower Care Intensity = Lower Cost
Lower Care Intensity = Lower Cost $50,000 $40,000 $30,000 $20,000 $10,000 Mean cost (2008 US$) $0 MEAN ANNUAL COPD-RELATED MEDICAL, PHARMACY AND TOTAL COSTS BY CARE INTENSITY COHORT Outpatient cohort Urgent outpatient cohort ED cohort Standard admission cohort ICU cohort Int J Chron Obstruct Pulmon
Slide 18: Hospital
Hospital “| & ¢ Lp & Fisher & Paykel HEALTHCARE
Slide 19: Respiratory Humidification
Respiratory Humidification ¢« Normal airway humidification 19 is bypassed or compromised during ventilation or oxygen therapy Mucociliary transport system operates less effectively Need to deliver gas at physiologically normal levels - 37°C body core temperature - 44mg/L 100% saturated Fisher & Payk
Slide 20: Optiflow - Displacing Conventional Oxygen Therapy
Optiflow - Displacing Conventional Oxygen Therapy CONVENTIONAL NON-INVASIVE OXYGEN THERAPY VENTILATION Fisher & Paykel 20 HEALTHCARE
Slide 21: Clinical Outcomes of Optiflow Nasal High Flow Therapy
Clinical Outcomes of Optiflow Nasal High Flow Therapy Optiflow NHF therapy is associated with: ADULTS: PAEDIATRICS: * REDUCED intubation® * REDUCED intubation? ¢ REDUCED re-intubation® ” ® * REDUCED length of stay'® * REDUCED bilevel ventilation’ * REDUCED respiratory distress" * REDUCED nursing wor
Slide 22: Optiflow NHF - A Growing Body of Clinical Evidence
Optiflow NHF - A Growing Body of Clinical Evidence NASAL HIGH FLOW CLINICAL PAPERS PUBLISHED ANNUALLY Fisher & Paykel 22 Source: PubMe! HEALTHCARE
Slide 23: Consistently Strong Growth in Hospital New Applications
Consistently Strong Growth in Hospital New Applications CONSTANT CURRENCY REVENUE GROWTH RATE IN NEW APPLICATIONS CONSUMABLES* 35% 30% 25% 20% 15% 10% 5% 0% 2011 2012 2013 2014 2015 2016 2017 2018 * New applications consumables now make up 59% of Hospital consumables revenue, up from 50% in FY2016 a
Slide 24: Homecare
Slide 25: Obstructive Sleep Apnea
Obstructive Sleep Apnea 25 Temporary closure of airway during sleep Can greatly impair quality of sleep, leading to fatigue; also associated with hypertension, stroke and heart attack Estimated US$3+ billion worldwide market. Estimate >50 million people affected in developed countries Most common tr
Slide 26: Revolutionary Masks
Revolutionary Masks *« Market leading mask technology * Unique, patented designs * Mask Matters Most - Masks are key to compliance 26 F&P ESON 2” F&P SIMPLUS” F&PBREVIDA” Fisher &.Paykel
Slide 27: Home Respiratory Support
Home Respiratory Support *« Chronic obstructive pulmonary disease (COPD) is a lung disease which is commonly associated with smoking ¢« Emphysema and chronic bronchitis are both forms of COPD * Chronic respiratory disease, primarily COPD, is the third leading cause of death in the US'6 * 6% of US ad
Slide 28: High Level of Innovation and Investment in R&D
High Level of Innovation and Investment in R&D * R&D represents 9.7% of operating revenue: NZ$94.7M * Product pipeline includes: - Humidifier controllers - Masks - Respiratory consumables - Flow generators - Compliance monitoring solutions * 186 US patents, 385 US pending, 870 ROW, 912 ROW pending’
Slide 29: Growing Patent Portfolio
Growing Patent Portfolio FISHER & PAYKEL HEALTHCARE US PATENT PORTFOLIO (2008 - 2018) 450 200 150. 100 Tina ie) 10 2012 2014 2016 2018 2008 20 mUS Patents US Patent Applications Average remaining life of FPH patent portfolio (all countries): 12 years* 29 * Asat 31 March 2018 FisheréPaykel HEALTHCARE
Slide 30: Manufacturing & Operations
Manufacturing & Operations * Vertically integrated - COGS improvements: Mexico, lean manufacturing, supply chain « Ample capacity to grow Auckland, New Zealand * Three buildings: 82,000 m2 / 885,000 ft? total * 100 acres / 40 hectares land ¢« Fourth building underway Tijuana, Mexico * 18,000 m2 / 20
Slide 31: Strong Global Presence
Strong Global Presence REVENUE BY REGION 12 MONTHS TO 31 MARCH 2018 * Direct/offices - Hospitals, home care dealers - Sales/support offices in North America, Europe, Asia, South America, Middle East and Australasia, 15 distribution centres - More than 950 staff in 29 countries - Ongoing internationa
Slide 32: Long Term Margin Targets
Long Term Margin Targets GROSS MARGIN OPERATING MARGIN 70% 30% mm mm meee 60% 25% 50% 20% 40% 15% 30% 10% 20% 10% 5% 0% 0% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 = = = Gross margin target = = = Operating margin target 32 Note: the long term margin targets are based on an assumption of a c
Slide 33: Ownership Structure and Listings
Ownership Structure and Listings * Listed on NZX and ASX (NZX.FPH, ASX.FPH) SHAREHOLDING STRUCTURE AS AT GEOGRAPHICAL OWNERSHIP AS AT 31 MARCH 2018 31 MARCH 2018 NZ Institutions @ Other Institutions m Brokers & Retail m Other mNew Zealand m Australia m@ North America mUK mEurope (ex UK) Asia Fisher
Slide 34: Consistent Growth Strategy
Consistent Growth Strategy 34 Our outputs Increased ‘efficiency of care Improved Over 45 years care & oft ‘outcomes for patients Care by Design Impro through inspi world-leading healthcare Increased shareholder value Benefits to ‘our people Doubling ‘our constant Trusted brand currency revenue every
Slide 35: Financials
35 Financials el Fisher & Paykel HEALTHCARE
Slide 36: Full Year Operating Results
Full Year Operating Results FY2018 (12 months to 31 March 2018) % of Revenue NZ$M OPCP* Occ* Operating revenue 100% 980.8 +10% +9% Cost of sales 33.7% 330.4 +9% +8% Gross profit 66.3% 650.4 +10% +9% Other income (R&D grant) 5.0 0% 0% SG&A 29.7% 290.9 +8% +7% R&D 9.7% 94.7 +10% +10% Total operating e
Slide 37: Cash Flow & Balance Sheet
Cash Flow & Balance Sheet FY2018 (for the 12 months ended 31 March 2018) NZ$M Operating cash flow (+28%) 247.8 Capital expenditure 98.7 Depreciation and amortisation 44.6 FY2018 (as at 31 March 2018) NZ$M Net cash 49.9 Total equity 761.4 Total assets 1,025.1 % Pre-tax return on average equity 37.6%
Slide 38: Foreign Exchange Effects
Foreign Exchange Effects * 51% of operating revenue in USD (FY17: 52%) and 20% in €. Year to 31 March Hedging position for our main exposures 2019 2020 2021 2022 2023 USD % cover of expected exposure 70% 55% 20% 0% 0% USD average rate of cover 0.675 0.659 0.628 - - EUR % cover of expected exposure 8
Slide 39: Profit & Loss by Currency
Profit & Loss by Currency FY2018 (for the 12 months ended 31 March 2018) REVENUE BY CURRENCY COST OF SALES BY CURRENCY OPERATING EXPENSES BY CURRENCY =NZD #USD BEUR @MXN mOther = NZD USD BEUR MXN m Other =NZD #USD BEUR @MXN mOther Fisher & Paykel 39 HEALTHCARE
Slide 40: References
References References 1 2 3 4 5. 6 7 8. 9. 10, 0. 2 B 4 15, 16 17. 18 40 Grayson K. Vincent, Victoria A. Velkoff, The Next Four Decades. The Older Population in the United States: 2010 to 2050. US Census Bureau, 2010. Cynthia L Ogden, Cheryl D Fryar et al. Mean Body Weight, Height, and Body Mass Ind
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